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September 11, 2013

The Philippines Leads Its Peers in Performance Budgeting

Posted by Sandeep Saxena

The Government of the Philippines’ (GoP) budget proposals for the year 2014, presented to the Congress in July, contain important performance information for every government program. For the first time, government departments and agencies have spelt out their vision, mission, target outputs that they will produce from the resources sought, and the expected performance standards in service delivery. For instance, one of the Bureau of Fire Protection’s targets is to respond within five to seven minutes to 87 percent of the more than 5,000 distress calls the Bureau expects to receive in the year. The National Police promises a minimum of 629,258 crime investigations and a 25 percent increase in the number of foot and mobile patrols. The Department of Education aims to deliver a pass rate of 84 percent in the National Achievement Test that will be taken by 12.56 million secondary school students; and the Department of Social Welfare undertakes to serve meals to more than 2.5 million schoolchildren.

This move by the Department of Budget and Management (DBM) is being hailed in the country as “the single most important budgeting innovation in years”. According to media reports, the legislators are “pleasantly amused” at the detailing of information on what an agency must deliver with the use of public resources. They expect the budget scrutiny to be lengthier and the discussion on the floor of the Congress to be more meaningful. With this reform, the government has taken an important step forward in its commitment to promoting and developing a people-centric and results-based public administration.

The Philippines’ experience with performance-based budgeting goes back to 1998, when the DBM introduced an initial form named Organizational Performance Information Framework (OPIF). The basic building blocks of that framework are Major Final Outputs (MFOs) and Program Activities and Projects (PAPs), and the relationship between them. An MFO is defined as goods and services that an agency is mandated to deliver to external clients through the implementation of its PAPs. Each department identifies and specifies the MFOs that it is required to produce in pursuit of its objectives. MFOs are linked to organizational outcomes that in turn are linked to sectoral and societal goals identified by the medium-term Philippines Development Plan, and converge to one of the five key result areas (KRAs) of the present administration. The result is an Agency OPIF Logical Framework (Logframe):

PAPs →MFOs → Organizational Outcome → Sector Outcome → Societal Outcome →KRA

Over the years, this framework has undergone several improvements and is now well established in the national government. The process of improvement, however, has been a long and arduous one. The present form of OPIF was introduced in 2005. It attempts to define and establish where government agencies should direct their development efforts and the priority areas to which agencies should allocate their resources. In identifying MFOs, departments are expected to review their mandate and functions, formulate the organizational outcomes that they are expected to achieve or contribute to, and the MFOs they are expected to deliver for that purpose. In doing so, they are also expected to identify activities that need to be reoriented or given up. A massive capacity building effort was required for the departments to build understanding of the new framework and to learn how to implement it. DBM and the National Economic Development Agency (NEDA) facilitated the process with a series of workshops, coordination and harmonization meetings and discussions among the oversight agencies and the departments.

The process of integrating OPIF with the budget has taken a number of years. Since 2007, DBM started producing a consolidated Book of Outputs for all the government departments, but it remained an isolated performance reporting tool, with little or no bearing on budget decision making, which continued to be line-item based. As the framework matured and capacity developed in the line departments, DBM gained confidence to integrate OPIF with the budget. IMF technical assistance helped it overcome the remaining hurdles. A February 2013 Fiscal Affairs Department technical assistance mission assisted the DBM in designing a new budget structure that simplified budget presentation and integrated performance information. The mission also provided a roadmap for improving the budget process to take advantage of the available information in budget decision-making.

Challenges, however, remain. The framework still offers scope for technical refinements. There has been a surge of available information that needs to be systematically verified and made use of in resource allocation decisions. Putting together an efficient performance monitoring and evaluation mechanism is likely to be equally challenging and daunting. Not overawed by these challenges, the GoP continues to make progress and needs to be congratulated for being among the first in its peer group of countries in the region to have presented a performance-oriented budget.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 


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It's great when things start to go straight. This is good for the country.
I'm from Mozambique, and things here are not going well like in Philippines. Over 10 years of budget reforms and still having problems to link the budget to the government strategies, even to mandate and functions of the Ministries.
I will be greatful if you share more daitail about OPIF. I would like use it to improve some planning frameworks that are not working well.

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